Opinion
Case No. 6:18-bk-06410-LVV Adv. No. 6:18-ap-00126-LVV
03-30-2021
In re: Brian George Lederman, Debtor. Brian George Lederman, Plaintiff, v. U.S. Department of Education, Defendants.
Chapter 7 ORDER DENYING MOTION FOR RECONSIDERATION
THIS ADVERSARY PROCEEDING came before the Court, without a hearing, on the Motion for Reconsideration of Verdict at Trial Due to Obvious Error (the "Motion") (Doc. No. 50) filed by Plaintiff, Brian George Lederman (the "Debtor"). The Debtor seeks reconsideration of the Court's Final Judgment in Favor of Defendant and Against Debtor (the "Final Judgment") (Doc. No. 51). Because the Debtor has not established sufficient grounds for reconsideration, the Motion is denied.
The Motion was filed before the Final Judgment was entered because it is based on the Court's oral ruling after trial.
The Debtor filed a petition for relief under chapter 7 of the Bankruptcy Code on October 17, 2018. In his Schedules, the Debtor listed a debt to the U.S. Department of Education in the amount of $711,284.92 for student loans (the "Student Loans"). On October 17, 2018, the Debtor filed this Adversary Proceeding seeking to discharge his Student Loans under 11 U.S.C. §523(a)(8) as creating an undue hardship. The Court held a one-day trial on July 22, 2020. After considering all evidence and arguments of the parties, the Court made findings and fact and conclusions of law orally on the record. The Court determined that the Debtor could not satisfy the three requirements of the Brunner test, and therefore, the Student Loans would remain non-dischargeable.
11 U.S.C. §§101, et seq.
Brunner v. New York State Higher Educ. Services. Corp., 831 F.2d 395 (2d Cir. 1987). --------
The Brunner test, which has been adopted by the Eleventh Circuit in In re Cox, 338 F.3d 1238, 1241 (11th Cir. 2003), provides:
To establish undue hardship, the Brunner standard requires the debtor to prove by a preponderance of the evidence that: (1) the debtor cannot maintain, based on current income and expenses, a "minimal" standard of living for himself and his dependents if forced to repay the loans; (2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) the debtor has made good faith efforts to repay the loans.
After determining that the Debtor did not prove by a preponderance of the evidence the elements established by Brunner, the Court entered Final Judgment in favor of the Defendant. The Debtor now seeks reconsideration of the Court's ruling based on an alleged "obvious error."
A motion for reconsideration of a final order is treated as a motion seeking a new trial under Rule 59, Federal Rules of Civil Procedure, incorporated by Rule 9023, Federal Rules of Bankruptcy Procedure. See In re Kellogg, 197 F.3d 1116 (11th Cir. 1999). Under this analysis, the Debtor must demonstrate why the court should reexamine its prior decision, and "set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision." In re Stewart, 280 B.R. 268, 287 (Bankr. M.D. Fla. 2001) (citing Cover v. Wal-Mart Stores, Inc., 148 F.R.D. 294, 295 (M.D. Fla. 1993)). Courts have recognized three grounds for justifying reconsideration: (1) an intervening change in controlling law; (2) the availability of new evidence; and (3) the need to correct clear and manifest injustice. In re Envirocon Intern. Corp., 218 B.R. 978, 979 (M.D. Fla 1998). A motion for reconsideration is not grounds to reargue or relitigate issues already decided. In re Parker, 378 B.R. 365, 371 (Bankr. M.D. Fla. 2007).
In seeking reconsideration, the Debtor has not asserted or established any of the three grounds for reconsideration. Instead, the Debtor appears to reargue issues that have been decided by the Court. Debtor's Motion, in fact, is written like an appellate brief citing to the Court's "obvious errors." Specifically, the Debtor argues that the Court committed error in determining he did not satisfy the Brunner test. The Court will address each of the Debtor's arguments.
First, the Debtor argues that the Court erred in determining that he could maintain a minimal standard of living when he was unemployed as of the date of the trial and living with his parents. The Debtor further argues that the Court should not have considered his unemployment benefits when considering his standard of living. Under the Brunner test, the Court is tasked with determining whether the Debtor could maintain a minimal standard of living based on current income and expenses. Brunner, F.2d at 396. The Debtor's Schedules I and J showed that as of the date of filing, the Debtor had a net positive monthly income of $1,096.50. The Debtor testified at trial that his present situation was actually better than the Schedules portrayed because of the increase in unemployment benefits. Based on the evidence available at trial, the Debtor had sufficient income to make payments under an income-based repayment program ("IBR") and maintain a minimal standard of living. The Debtor argues that the Court should not consider his current living situation (he lives with his parents) but should assume he would incur additional living expenses to live on his own. This is not the standard. Brunner considers a "minimal" standard of living, not an ideal standard or even a good standard of living. Even if the Court were to accept Debtor's argument that living with his parents and relying on unemployment is not a minimal standard of living, Debtor is still unable to satisfy the two remaining prongs of the Brunner test, discussed below.
Second, the Debtor argues that the Court committed error in ruling that no additional circumstances exist indicating that this state of affairs is likely to persist. Debtor argues that his case is unlike other student loan cases due to the sheer magnitude of his debt. While Debtor's student loan debt certainly exceeds what the Court normally considers, the Debtor is also highly educated and has additional prospects for the future. The Debtor testified that he was preparing to attend the University of Nevada, Las Vegas, to obtain a Master of Science in Hotel Administration and had been offered a position to work as a teaching assistant on a semester-by-semester basis.
The Debtor presented no evidence or argument that he suffers from any physical or mental impediment that would prevent him from obtaining gainful employment in the future. Debtor's own testimony indicates the current situation is not likely to persist. Instead, Debtor argues that regardless of his income he cannot afford payments on such a large debt. Debtor's argument pre-supposes that he will not enter into an IBR plan that would significantly reduce his monthly payments. The Debtor cannot refuse to take advantage of available options to reduce his monthly payment and then argue that he will never be able to pay because of the magnitude of the debt. The Debtor cannot meet his burden on this prong.
Third, the Debtor argues that his failure to obtain an IBR plan is not sufficient for this Court to find that the Debtor has not made a good-faith attempt to repay the loan. Debtor points to his faithful loan payments for a five-year period; however, the evidence also demonstrates that the Debtor could have participated in an IBR plan and reduced his payments between $177 - $598 per month based on an adjusted gross income of $40,000 or between $761 - $2681 per month with an adjusted gross income of $110,000. The Debtor has refused such a plan because he believes the forgiveness of debt at the end of the repayment plan will create a substantial tax burden. The potential tax consequences the Debtor may have in 25 years upon completion of an IBR are too speculative for the Court to consider and do not provide a justification for the Debtor to reject this repayment option. See In re Gesualdi, 505 B.R. 330, 346 (Bankr. S.D. Fla. 2013).
Finally, the Debtor argues that, as a court of equity, this Court could discharge a portion of his Student Loans to make them more manageable. Under 11 U.S.C. § 528(a)(8), the Court may only discharge student debt upon a finding of undue hardship. There is no lesser standard that would allow for a partial discharge. The Court has not found that excepting the Student Loans from discharge will impose an undue hardship on the Debtor. Without such a finding, the Court cannot grant the Debtor a discharge, partial or otherwise, of his Student Loans. See In re Cox, 338 F.3d at 1242.
The Debtor has failed to provide any grounds to justify reconsideration. Accordingly, it is
ORDERED that the Motion (Doc. No. 50) is DENIED.
ORDERED. Dated: March 30, 2021
/s/_________
Lori V. Vaughan
United States Bankruptcy Judge The Clerk is directed to serve a copy of this order on all interested parties who are non-CM/ECF users and file a proof of service within 3 days of entry of the order.